Suterwalla & Anor. v The Commissioners for HMRC
[2023] UKFTT 450 (TC)
Andrew Jonathan and Della Ann Bloom v The Commissioners for HMRC
12 July 2023
[2023] UKFTT 628 (TC)
First-tier Tribunal
Someone bought a big house with extra land and a sewage system shared with neighbours. They tried to get a tax break saying the sewage area wasn't part of the house, but the judge said it was because it was needed and the sharing wasn't a real business deal.
Key Facts
- •Appeal against a closure notice disallowing a claim for overpayment relief of £265,750 in SDLT.
- •Property purchased: 24 Totteridge Common, London, comprising two registered titles: 'The Paddocks' (1.9 acres) and 5.6 acres of land including a sewage treatment plant (STP).
- •Dispute centered on whether the STP and the 5.6 acres formed part of the garden and grounds of the dwelling for SDLT purposes.
- •STP served the main property and 10 neighboring flats.
- •Title deeds contained covenants regarding cost-sharing for STP maintenance (25% Appellant, 75% others).
- •Appellant argued the STP's presence and commercial cost-sharing arrangement made the 5.6 acres non-residential.
- •HMRC argued the entire property, including the STP and 5.6 acres, was residential.
Legal Principles
Definition of "residential property" under section 116(1) of the Finance Act 2003.
Finance Act 2003, section 116
Interpretation of "garden or grounds" – no objective quantitative limit; considers all relevant factors without a single determinative factor; functionality and common ownership are relevant but not sufficient.
Hyman and Goodfellow v HMRC [2022] EWCA Civ 185; Hyman v HMRC [2019] UKFTT 0469 (TC); James Faiers v HMRC [2023] UKFTT 212 (TC)
Commercial use of land can preclude it from being considered "garden or grounds", but active and substantial exploitation is required.
HMRC SDLT Manual 00460; Withers v HMRC [2022] UKFTT 433 (TC)
Restrictions on land use (e.g., rights of way, easements) do not automatically prevent land from being residential.
SDLTM475; James Faiers v HMRC [2023] UKFTT 212 (TC)
Interpretation of 'building' in the singular to include plural.
s.6 Interpretation Act 1978
Outcomes
Appeal dismissed.
The Tribunal found insufficient evidence to demonstrate the STP and 5.6 acres were not part of the garden and grounds. The cost-sharing arrangement was deemed a covenant, not a commercial agreement. The STP's presence and associated restrictions did not convert the property to mixed use.